Snyder wants big changes to Michigan auto insurance

By DAVID EGGERT, Associated Press

Thursday, April 18, 2013

LANSING, Mich. (AP) — Michigan drivers would pay at least $125 less a year for car insurance but lose unlimited lifetime medical benefits if catastrophically injured in a crash under legislation announced Thursday by Gov. Rick Snyder and Republican lawmakers.

“Michigan’s too expensive for auto insurance,” the governor said, arguing the state has the biggest premiums in the Midwest and eighth-highest in the country. “We need to do something about it.”

Michigan is the only state that offers unlimited medical benefits for catastrophic injuries and rehabilitation, currently costing motorists $175 per car per year. The assessment is rising to $186 this summer.

Everyone would buy $1 million in personal injury protection under the plan, which proponents said is still 20 times higher than in any other state. Critics quickly raised objections that have derailed previous attempts to change a 35-year-old fund covering more than 13,000 people with brain damage, paralysis and other incapacitating injuries.

“Thank God I live in Michigan now, and I hope Michigan does not pass this law,” said wheelchair user Arnie Grinblatt, 54, who was sitting outside the governor’s Capitol news conference to oppose the proposal.

The ex-financial consultant from Oakland County’s West Bloomfield Township said he was severely hurt in a 2001 rollover accident and needs 24-hour care costing $350,000 annually. Though he and other accident survivors now covered by the Michigan Catastrophic Claims Association would keep getting unlimited benefits, Grinblatt said he is worried there could be expense cuts or limits harming his quality of care.

“I can’t bathe myself. My caregivers are cooking for me, they are cutting up my food,” he said. “I have a lift that gets me in and out of bed.”

The MCCA would be phased out over time and a new nonprofit entity — funded by motorists — would cover auto accident-related medical claims above $500,000 up to the $1 million cap. Auto insurers would handle claims totaling below $500,000, as they do now.

An average Michigan family has two vehicles and would save $250 in the first year, Snyder said.

He said “99.5 percent” of people injured in a crash fall below $1 million in medical expenses. Newly injured victims whose care surpasses $1 million could be covered by government-subsidized insurance or their private plan, or they could sue, Snyder said.

The Republican governor deflected criticism that the $125-per-vehicle rate rollback would last just one year, saying “the market should work.”

Opponents said it is odd to see Republicans appearing open to more lawsuits and questioned shifting costs to taxpayer-funded Medicaid, resulting in what they said is lower-quality care.

“They’re pushing people, they’re warehousing them into nursing homes,” said John Truscott, spokesman for the Coalition Protecting Auto No-Fault, whose members include medical and consumer groups.

Snyder also called for creating a fund to prevent auto insurance fraud and no longer letting hospitals and doctors charge insurance companies more for auto-related injuries. The insurance lobby wants a fee schedule set in law similar to what exists for workers’ compensation injuries or Medicare.

Snyder notably did not ask for such a schedule, yet said it is something that needs to be worked out after the bill is introduced as early as next week.

“Why should there be essentially no controls or very high rates on auto-related insurance issues when there’s many kinds of insurance out there, there’s well-established prices being paid for them? Shouldn’t it be the same kind of rate structure?”

As an example, he showed a chart saying Medicare pays $262 for a CT scan, while auto insurers pay $1,820.

Drivers also would be charged $25 annually to help fund Medicaid because a 1 percent tax on health insurance claims, paid by insurers and HMOs, is not generating as much as anticipated when it went into effect in 2012.

Snyder’s plan is different from a legislator’s 2011 proposal — which stalled on the GOP-led House floor — that would have let drivers choose $250,000, $1 million or $5 million in personal injury protection coverage. Yet the new proposal could stall, too, as Democrats remain fiercely opposed and not every Republican is comfortable with changing the auto-insurance law.

“There is only a guarantee that we will have less coverage and we will still be paying more. We will still be paying an assessment and there’s a Medicaid charge as well,” said Rep. Kate Segal, a Battle Creek Democrat, saying premiums could jump after the one-year rollback.

House Insurance Chairman Pete Lund, a Republican from Macomb County’s Shelby Township who helped unveil the plan, said he does not like asking motorists to pay $25 for Medicaid. People, however, ultimately pay insurance taxes and fees indirectly, he said.

“Michigan, when it comes to benefits, we are No. 1 in the country. If this bill passes, we will drop all the way to No. 1. Going from unlimited to a $1 million in coverage is still 20 times higher than any other states in this country,” Lund said.

———Email David Eggert at deggert(at)ap.org and follow him at http://twitter.com/DavidEggert00